PE HUB Wire Highlights, 8.3.18


Photo of Luisa Beltran, PE HUB Senior Editor, courtesy of Buyouts Insider.

Brockway Moran scores more than 4x return with MD Now sale; TCV leads Peloton’s $550M round; HIG seeks $2.75B for U.S. buyout fund

Congrats, Hubsters, you’ve made it to Friday. Anyone have any exciting plans? I’m subbing for Chris today who is doing something mysterious.

It’s August and there’s not much news. I’m going to speak this morning about a sector that I think is going to change everything. I’m referring to legalized cannabis. Cowen & Co expects gross cannabis sales to reach up to $75 billion by 2030, while cannabis-research firm Arcview Market Research pegged the industry’s value at around $9.7 billion in 2017.

The market for legal cannabis is expected to grow at a CAGR of about 24 percent by 2021, according to Technavio. One major sector of the industry is cannabis edibles — think brownies, cookies and even cheese sticks— which is seen increasing by a CAGR of more than 25 percent from 2018 to 2022, Technavio said.

Whatever you may think, cannabis is here to stay. Recreational marijuana is legal in nine states, including California, while medical marijuana is legal in 30 states. (Oklahoma became the latest to legalize medical cannabis.) Up north, in Canada, recreational cannabis will become legal in October. One big deal in the sector was announced this week. Molson Coors Brewing Co and Hydropothecary Corp announced they are launching a JV to develop non-alcoholic, cannabis-infused drinks for the Canadian market. This to me is a pretty big development and could cause other brewers join in. What do you think, Hubsters? Is cannabis the new market for beer companies? Why or why not? Email me your thoughts at [email protected]

Funds: H.I.G. Capital is seeking $2.75 billion for its latest U.S. buyout fund focused on mid-market companies, Financial News is reporting. That’s up from its initial $2.25B target. Read our brief here.

Deals: Earlier this week, I talked about how private equity has used rollups to build companies. We’ve seen it a lot in healthcare (dental, dermatology and even hospitals) as well as insurance. Confie, an insurance broker backed by ABRY Partners, has acquired more than 100 companies. The company has been up for sale before and its current process has been ongoing for a while, I’m told. But Confie’s rollup strategy has some bidders wondering whether there are still enough logical acquisitions with scale for the company to move forward. Still, in today’s hot deal market, sources are confident that ABRY may find a buyer for Confie this time around. Find out how much Confie is seeking here.

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